Archives of “January 10, 2019” day

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TRADER’S TWO MOST POWERFUL WORDS

  
  Education

Let’s face it, no matter the outcome of a trade-lose, win, draw, and even the miss-traders are rarely satisfied with the result.  This is exactly why it is so important that we utilize the two most powerful words in a stock trader’s vocabulary..and no… it does not involve four letters!  The following is a list that you can use these two words with.  You will get my point.  Of course you can add to it if you like.

I missed the trade…SO WHAT!

This trade did not work…SO WHAT!

I excited a profitable trade too early…SO WHAT!

I excited with a loss too quickly…SO WHAT!

My stock gapped against me…SO WHAT!

The stock recovered without me…SO WHAT!

A stock I was bullish on was downgraded by an ANALyst…SO WHAT!

A stock I was bearish on was upgraded by an ANALyst…SO WHAT! (more…)

The 10 Scariest Things in Trading

  
  Education
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I was reading this article and started thinking about the ten scariest things in trading: The Top Ten Things That Make Horror Movies Scary. 

1. Fear of Death.  This is the ultimate fear, both existentially and psychologically. It isn’t really a horror movie if people don’t get killed.

In Trading: fear of depletion of assets.

2. The Dark. From our earliest childhood we are afraid of the dark – not the dark itself, but what it hides. It makes horror movies even scarier to watch them in a darkened theater, or a dark living room, right?

In Trading: not knowing enough news

3. Creepy, Crawly Things. Snakes, spiders, rats, and other crawling things are scary in and of themselves, but when they touch the skin, in the dark, it amplifies this common phobia.

In Trading: monthly expenses

4. Scary Places. Horror movies are full of scary places – graveyards, old houses, overgrown forests, dungeons, attics, basements. These are dark places, where evil things can hide.

In Trading: instruments or markets that one had very bad experiences with.


5. Disfigurement. Many horror movies feature grotesquely disfigured antagonists (think Frankenstein’s monster, the Phantom of the Opera, zombies). Studies in early development have found that young infants will react with fear to asymmetrical or disordered faces. (more…)

Improve Cognitive Performance-3 Simple Steps

  
  Education
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Here are three simple practices that can improve alertness, concentration, and overall cognitive performance:

1)  Hydration – Thanks to Henry Carstens for pointing this one out.  A lack of proper hydration has been found to negatively impact mood among women and decrease alertness and concentration among men.  A wide range of studies link dehydration to declines in short-term memory, concentration, alertness, visuomotor tracking, motor skills, and computational performance.  Water is essential for feeding the brain.

2)  Power Naps – Sleep is a restorative.  Although sleeping on the job has a negative connotation, research finds that power naps improve creativity, memory, energy level, and general cognitive functioning.  Naps also improve decision-making and problem-solving, with naps of different lengths offering different benefits.  A 20-30 minute nap is ideal for improving alertness.    

3)  Moving Around – Prolonged sitting carries a number of health risks.  Standing at the desk for a portion of the day can also increase energy and improve mood.  Exercise during the day improves sleep quality, energy level, and mood.

So what does that tell us?  The traditional way of working as a trader–sitting at the desk all day, hunched over and focused on screens, guzzling coffee and soda–is bad for our cognitive performance and bad for our health.  If you’re a world-class athlete, you will do everything possible to maintain your body in peak condition.  If you’re a world-class trader, keeping your brain in peak condition is equally important.  It makes little sense to spend time looking for more and better trade setups when our minds are poorly maintained to act upon those.

Finally, China Acknowledged The Bubble

  
Analysis, Economy, Education
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ChinaBubble

China’s lending surged to 1.39 trillion yuan ($203 billion) in January and property prices climbed the most in 21 months. According to the National Development and Reform Commission property prices in 70 cities of china have rose 9.5% from a year earlier. The surge of prices has been due to the affects of easy lending followed with uncontrolled flow of funds in to the main streets. Real estate is one of the sectors where prices have scaled up. Automobile followed with cements and capital goods are also under the ambit of excess flow of funds resulting over capacity bubble .Asset prices and commodity prices are also under the threat of excess valuation.
It’s not due to the stimulus package alone declared by china but the uncontrolled loans given by banks without taking care of any quality measures on the loan papers. Its juts like US mortgage case where quality of loans was never taken in to account. China’s 9.35 trillion yuan of loans in 2009 have given birth to the fear of another financial crisis in the fastest growing economy.
The borrowing in the month of January’s was 14% less than a year earlier, after the government targeted a reduction in new loans this year to 7.5 trillion yuan from a record 9.59 trillion yuan in 2009. This have happened due to the strict norms declared by china during the end of January 2010.Chinese banks are now focusing and have instructed on the quality of loans that are being disbursed. The new lending norms framed by china are:

Candlestick Formations -Learn & Earn

  
  Education
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Japanese candlesticks, which have been enjoying the spotlight in recent years, are difficult to explain in one broad brush. Candlesticks draw on the same open-high-low-close data as do bars. Here the length of the bar, or “candle,” is determined by the high and low, but the area between the open and close is considered the most important.

This area, the “body” of the candle, is filled with blue (or white for most charting programs) for closes higher than open, and is filled with red (or black from most charting programs) for down days. The wicks above and below constitute the “shadow” of the candle, or high or low.

No pattern is 100% correct, but these formations are often time incorporated into many mechanical systems and can provide as great information source for the naked eye.

doji

Doji – When the open and close price is almost the exact same value and the tails are not excessively long. This formation can alert investors of a possible indecision and during oversold or overbought conditions can possibly signal for reversal. The bulls and bears are equally pushing the price.

Long-Legged Doji

Long-Legged Doji – You can recognize this formation by one or two long tails (shadows). This formation will sometimes alert that we have reached the top of the market or warn that the trend has lost sense of direction.

Gravestone Doji

Gravestone Doji – This formation occurs when the open and close price is the same or near the low of the bar (period). Although this can be found at the bottom of a trend, this formation can be used to pick out market tops.

Hanging Man

Hanging Man – This formation looks like a body with feet dangling… or a hanging man. This occurs when there is profit taking near market open, then a rally with a close at or near the open price.  This formation can alert of a reversal and is typically found at the top of an up-trend. The longer the shadow, the greater the change is for a reversal.

Hammer formation

Hammer – This formation is a short body with a tail that is twice the body’s length. This occurs when there is a sell off near open, but then a rally supports a close at or near the open. This formation can alert of a reversal and is typically found at the bottom of a downtrend. The longer the shadow, the greater the changes are of reversal.

spinning Top

Spinning Top – This short body has sizable tables both on the top and bottom of the bar. This formation often times represents indecision and a standoff among the bears and bulls. There is little movement between the open and close, but both the bears and the bulls were active that trading day. After a long blue candlestick, a spinning top suggests weakness among the bulls. After a long red candlestick, a spinning top suggests weakness among the bears.

Bearish Engulfing Pattern

Bearish Engulfing Pattern – This formation is a major reversal pattern after the completion of an uptrend. After a blue candlestick, the next day will open above the previous day’s positive close, throughout the trading day it will blow past the previous days open completely engulfing the previous day’s movement.

Bullish Engulfing Pattern

Bullish Engulfing Pattern – This formation is a major reversal pattern after the completion of a downtrend. After a red candlestick, the next day will open below the previous day’s negative close, throughout the trading day it will blow past the previous days open completely engulfing the previous day’s movement.

Evening Star

Evening Star – This is a top reversal signal suggesting that prices will go lower. It is formed after an obvious uptrend. The 1st candlestick is a long blue box (usually when the confidence had peaked). This stick is followed by a small blue body, when the trading range for the day has remained small. The third bar (red) plows down at least 50% past the 1st day’s bar signifying that the bears have taken control.

Morning Star

Morning Star – This is a bottom reversal signal suggesting that prices will go higher. It is formed after an obvious downtrend. The 1st candlestick is a long red box followed by a small blue box, when the trading range for the day has remained small. The third bar (blue) shoots up at least 50% over the 1st day’s bar signifying that the bulls have taken control.

dark cloud

Dark Cloud Cover – This is a two bar formation that is found at the end of an upturn or at a congested trading area. The first bar is a blue (positive movement) bar followed by a red bar which reaches over the open of the previous days close and closes at least 50% down the previous days bar.

Piercing Pattern

Piercing Pattern – This is a two bar formation that is found at the end of a declining market. The first bar is a red (declining movement) bar followed by a blue bar which opens (often gaps) below the previous days close and reaches at least 50% of the previous days bar.

Dear Traders ,If  you want to know more about any other formation ..Just send me mail

Technically Yours

Anirudh Sethi

 

Scott Nations, The Complete Book of Option Spreads and Combinations-Book Review

  
  Education
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If you trade options, you’d do well to have Scott Nations’ Complete Book of Option Spreads and Combinations (Wiley, 2014) in your reference library. It’s an intermediate-level book that explains the structure of more spreads than most people will ever trade but that they should understand nonetheless. A case in point: a conversion or a reversal, a combination that is rarely executed as a package but that “a smart retail trader might end up having on.” (p. 209) It’s better to know in advance what this position is and how to deal with it.
There’s an abundance of information available online about option spreads and combinations, and Nations of necessity covers much of the same territory. But he proceeds more analytically, and he deals with issues that most online descriptions ignore, such as ways to mitigate wide bid/ask spreads. Take, for instance, the long call condor. Nations looks at an AAPL call condor that, using midpoint pricing, costs 18.87 and that, buying on the ask and selling on the bid would cost 0.63 more. What if we were to replace the in-the-money call spread “with something that’s out-of-the-money and has bid/ask spreads similar to the bid/ask spreads of these other out-of-the-money options?” That is, what if we sold a put spread with the same strikes instead of buying that call spread—and again sold at the bid and bought at the ask? Instead of paying a 0.63 penalty, we now pay only 0.27. This “new, magical structure” is an iron condor. (pp. 201-202)
In eleven chapters this book deals with vertical spreads, covered calls, covered puts, calendar spreads, straddles, strangles, collars, risk reversal, butterflies, condors and iron condors, and conversion/ reversal. Every strategy is encapsulated in cheat sheets and, more importantly, is illustrated with examples, complete with tables and figures. Here, for instance, is the graph of a vertical spread he analyzes, which includes the probability of profitability—something he explains how to calculate on the previous page.
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PBOC says complexities facing Chinese economy can not be underestimated

  
Analysis, Education

Peoples Bank of China over the wires

  • PBOC will maintain prudent policy
  • will keep mon pol flexible. Neither too tight nor too loose
  • will use mon pol tools to maintain appropriate liquidity
  • yuan remains within reasonable range
  • PBOC will lower social financing cost, will realise reasonable growth in social financing , money supply and credit

China still rightly and understandably on the cautious side as they face the challenges of loosening up the economy whilst also managing the downward trend.

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